For the first time in decades Western Canada is going to have a new major competitor in the grain industry with the announcement of the investment by G3 Global Grain Group (G3) in CWB.
G3 Global Grain Group (G3), a newly established agribusiness joint venture between Bunge Canada and SALIC Canada Limited, has been named the successful investor in CWB. SALIC Canada Limited is a wholly owned subsidiary of Saudi Agricultural and Livestock Investment Company (SALIC), based in Riyadh, Saudi Arabia. Bunge Canada is an integrated food and feed ingredient company. At the highest level, G3 seeks to unlock the potential value of agricultural products across Canada by establishing a highly efficient coast-to-coast grain enterprise.
The investment of C$250 million (subject to certain closing conditions and adjustments) will result in G3 acquiring a majority ownership interest of 50.1 per cent in CWB, with the remaining stake of 49.9 per cent to be held in trust for the benefit of farmers and administered through the Farmer Equity Plan announced by CWB in 2013, with G3 having an option to buy them out after seven years. “G3’s significant investment in CWB together with the Farmer Equity Plan will create a major new competitor by facilitating the continued expansion of our grain handling network,” said CWB President and CEO Ian White. “Creating value for farmers will continue to be at the core of CWB and this plan offers them a unique opportunity to have equity, at no cost to them, in an international grain company.” The transaction is expected to close in July 2015.
CWB, previously known as Canadian Wheat Board until the federal government removed its western grain monopoly in 2012, is a grain handling and trading company that operates a network of seven grain elevators in Western Canada and port terminals in Thunder Bay, Ontario and Trois Rivieres, Quebec. CWB is building four additional state-of-the-art grain handling facilities in Bloom and St. Adolphe, Manitoba, and Colonsay and Pasqua, Saskatchewan. Bunge’s export terminal in Quebec City as well as four elevators in Quebec will be part of the transaction.
Ian White will continue with CWB until closing and for a period of time thereafter to ensure a successful transition period. CWB’s Board has not yet been confirmed but will consist of seven directors including a representative of the Farmers Trust.
“It is a dynamic time for Canadian agriculture. As global demand for agri-products grows, consumers continue to demand the high quality grain produced by our Canadian farmers,” says Karl Gerrand, CEO, G3. “Our vision is to establish a highly efficient coast-to-coast Canadian grain enterprise that provides stronger market access solutions for growers and delivers value to our stakeholders and the Canadian agriculture industry as a whole. We welcome the CWB team and farmer equity owners, and look forward to working together to build a new and dynamic company.”
“Bunge’s relationship with Canadian farmers extends nearly 50 years through our grain operations in Eastern Canada and our oilseed processing facilities throughout the country,” said Todd Bastean, CEO, Bunge North America. “The investment in G3 and CWB complements our existing Canadian footprint and strengthens our origination and export capabilities in one of the world’s premier growing regions.”
“Canada is poised to play an increasing role in providing food to a growing world population and in capturing a larger share of the international market demand,” says Abdullah Al-Rubaian, Chairman, SALIC. “SALIC is committed to infrastructure investment in countries such as Canada, which are exporters of surplus supplies of high quality grain. The launch of G3 will enable us to invest in infrastructure across Canada, providing more market choices for Canadian producers. We are committed to G3’s growth strategy and are excited to work with Bunge, CWB, and the Canadian farming community.”
Canada shipped 378,000 tonnes of wheat to Saudi Arabia in 2013/14, and 126,500 tonnes of barley, representing just over 10 per cent of Saudi Arabia’s (3.4 million tonnes of) annual wheat imports and only 1.5 per cent of its (9 million tonnes of) annual barley imports. Saudi Arabia and other Gulf states have invested heavily in overseas agricultural projects during the past few years.